New SS rule and Credit Report

[Sigma1914]

Has anyone heard about this new rule that the credit bureaus will finally be using a code so that mortgage companies/loan officers can tell if a mortgage  was done as a short sale and not a foreclosure? Currently credit bureaus are reporting foreclosures and short sales the same and there different in terms of how long you must wait before you can purchase again. I hope this happens fast. I'm going through the hardest time right now because I have a short sale but its appearing as a foreclosure on my credit report even though I have the settlement/HUD-1/Letter from bank stating it was settled for less than amount but a short sale. My Loan Officer keeps telling me its the code the bank uses when they report to credit bureaus. Hopefully everything is cleared soon...closing scheduled for 8/30/13.

[ShanetheMortgageMan]

I have not heard of it, but that would be immensely helpful as I run into the "short sale reporting as foreclosure" issue all of the time.  However it's the lender who reports the code to the credit bureaus, it's not the credit bureaus who assign the code.  In my opinion, the short sale should just report as late as the payment went - so if it went 120+ days late then it should be reporting as a "5" to the credit bureaus, which will not be flagged as a foreclosure on the credit report.

If you are doing a government loan (FHA, VA or USDA) then your loan can be manually underwritten in the situation where it's being reported as a foreclosure... however if you are doing conventional financing then it's much tougher to find a lender who is willing to manually underwrite the loan as a short sale.

[Sigma1914]

Thanks so much for your help. I'm doing a VA loan and its currently being manually underwritten. So hope it all works out. I close on the 30th of August.